Decentralized finance, or DeFi, is all the rage in Ethereum’s nook of the cryptoeconomy lately thanks to the recent memetic rise of “yield farming,” i.e. earning returns for putting your money to use in DeFi platforms.
Yet there’s another hot Ethereum sector that’s also been picking up lots of steam this year, and it’s the NFT sector.
Most folks who are crypto-savvy but don’t know much about NFTs, which go by names like non-fungible tokens, nifties, or crypto collectibles, may recognize the term from the CryptoKitties craze in late 2017, when Ethereum users invested in the franchise’s digital kitties in droves.
Since then, the NFT arena has exploded in activity, and 2020 has been something of a boom year for the scene. That’s evidenced by the fact the NFT market just reached its first $100 million in total sales in July 2020.
It’s an impressive early milestone that suggests the sky could be the limit from here for NFTs. To get a better sense of what this milestone means going forward, let’s dig into the basics of NFTs and just how far they’ve come so far.
The NFTs 101
What makes an NFT an NFT?
Let’s put it this way: there are fungible assets and non-fungible assets. Fungible assets are interchangeable with each other. $1 is effectively indistinguishable from any other $1, and the same is true for 1 BTC compared against another 1 BTC.
Conversely, non-fungible assets are things like artworks or land that are readily distinguishable. Non-fungible tokens, then, are blockchain-powered digital assets that are verifiably scarce and unique.
As Ethereum is the most popular platform for minting NFTs to date, the most popular NFT standard so far is Ethereum’s ERC721 specification, which was first published in January 2018. ERC721 tokens have become the most widely used NFTs ever since.
OGs: CryptoPunks & CryptoKitties
You can draw a straight line from where the NFT economy is today to two of the arena’s earliest hits, CryptoPunks and <a…